Devolved Welsh stamp duty could hit prime homes

Estate agents fear prime property purchases could be targeted by the first Welsh tax in over 800 years.

Concerns have been raised that the Welsh government may adopt a more progressive model of property taxation, along the lines of Scotland’s new tax, when powers are devolved to Cardiff in 2018.

 

A consultation on land transaction tax, which will replace stamp duty in Wales, concluded this week, but rates and bands will not be decided until well after Welsh assembly elections next year.

Stamp duty collected in Wales totalled only £145m in 2013-14, although the Office for Budget Responsibility recently forecast that this would rise to £231m by 2018-19 — the year when control of the tax will be devolved.

Although average house prices in Wales — at £170,000, according to the latest Office of National Statistics figures — are much lower than the UK average of £267,000,  there has been no proposal to lower the threshold at which tax becomes payable. This lower limit currently stands at £125,000.

Additional powers for Cardiff were proposed by the Conservative-led government earlier this year. Combined with the devolution of stamp duty, landfill tax and business rates, the Welsh assembly would be responsible for raising roughly one-fifth of its budget.

Plaid Cymru, the nationalist opposition party, wants Wales to have the same taxation powers as Scotland, which is set to gain control of its income tax and bands following last year’s independence referendum.

Landlords have two months to register deposits – or face £3,600 fine

Buy-to-let investors have until June 23 to sign up to an official deposit scheme or pay costly penalties 

Thousands of landlords with long-standing tenants could face a £3,600 shock penalty unless they register deposits by this summer. 

The Government is running a 90-day amnesty for buy-to-let investors who have yet to put their tenants' deposits into an official scheme. 

Fines for not registering by the June 23 deadline are unlimited and worked out at three times the initial deposit; the average sum tenants put down before moving in is £1,200. 

It is thought that up one in three of the 1.5 million private landlords in England and Wales are not registered with a deposit protection service despite legislation enforced in 2007. 

Not all of these landlords fall under the scope of the legislation; for example, university lets and licence agreements, an arrangement different to a tenancy that includes lodgers, are excluded. 

Any landlord with an "assured short hold tenancy" agreement must register with one of three Government-backed schemes, although Scottish landlords aren't covered by the legislation. 

Hefty penalties aside, landlords who fail to register will also be left powerless if they want a tenant to leave at the end of their contract, because in the event of a dispute the landlord will be seen to have failed their obligations. 

Landlords who have had tenants for several years, where the agreement keeps rolling over, are those most likely to be caught. These landlords may not use a letting agent, which would notify them of the need to register deposits, and may not have been keeping an eye out for the regulations when they were introduced in 2007.

Of course, there is no excuse for new landlords not complying with the law. But many long-term buy-to-lets where the tenant and landlord have a good relationship may not realise they need to register with a scheme.

Such landlords may be unaware that they need to register deposits and may not even have taken a deposit in the first place.

Deposit protection was set up as a compulsory scheme eight years ago to mediate disputes at the end of the tenancy. 

When introduced in April 2007, it was unclear if landlords with existing tenants would also need to register, but a court later decided that all tenants – including those who had moved in before this date – should have their deposits protected. 

The court ruled in 2013 that tenant Marino Rodrigues, who had moved in a few months before the law came into force, could not be told to move out when his tenancy ended, because the landlord had failed to register his deposit. 

The new amnesty – which began on March 26 under the new Deregulation Act – will simplify the "muddied" obligations of landlords.There are now a large number of deposits that need protecting despite not previously needing to be, and it’s likely that many landlords won’t even be aware of what they need to do.

Landlords who still hold a deposit should protect it if they haven't already done so, which will ensure that you can legally regain possession of a property [if you need to].

Do I need to register a deposit – and how? 

Most buy-to-let properties have an "assured short hold tenancy" contract in place, which means the landlord must protect the tenancy deposit in a Government-approved scheme.

There are certain exceptions, for example a university hall of residence or a lodger renting a room in the landlord's home. 

Landlords have thirty days from receiving the deposit to register with either the Deposit Protection Service, MyDeposits or the Tenancy Deposit Scheme. Separate schemes apply in Scotland and Northern Ireland. 

In the case of a dispute between landlord and tenant, the deposit will be protected in the scheme until the issue is sorted out. 

At YOUR AGENT we protect all deposits through the Deposit Protection Service. If you need help managing your rental property give us a call.

General Election 2015: "Excellent" result for the housing market

Property market expected to pick up after Conservatives head back to power.

The housing market heaved a sigh of relief today after David Cameron walked back into Number 10.

Fears of a prospective Mansion Tax and higher rates of income tax if Labour won the General Election left the property market on tenter hooks in the weeks running up to polling day.

Many buyers had put their purchase on hold, particularly those buying properties above the £2m threshold that would have been hit by the mansion tax if Ed Miliband had come to power.

Prices are expected to rise by 5 per cent before the end of this year as a result of the Conservative win, with forecasts from both Halifax and the Centre for Economics and Business Research in this region.

Promises made by the Conservatives in their election manifesto focused on “everyone who works hard having the chance to own their own home”. David Cameron now has another five years to keep good on his word.

The key elements of the manifesto regarding the property market included keeping mortgage rates lower and building more affordable homes - including 200,000 new Starter Homes exclusively for under first-time buyers under 40.

The Conservatives also said they would extend the Help to Buy Loan scheme to 2020 and introduce a new Help to Buy Isa to support people saving for a deposit.

It will also extend the Right to Buy to tenants of Housing Associations and create a brownfield fund to unlock homes on brownfield land. At the same time, local people will have more control over planning, while the Green Belt will be protected.

Average first-time buyer needs £30,000 salary to buy a house in \Wales

The average first-time buyer needs a minimum income of £30,000 in order to secure a mortgage,  the average Welsh wage is £20,000. 

A report published by KPMG this week found that the divergence between house prices and wages has grown so wide that affordability is now an issue for all aspiring buyers unless they have very high earnings - or inherit money. 
 

First-time buyers in London have the toughest time getting on the property ladder. They need to earn a whopping £77,000 in order to buy their first home. In reality the average worker earns just £28,000.

The figures, which are based on a 10pc deposit and borrowing the remaining 90pc at 4.5 times annual income, vary widely between the North and South. 

Northern Ireland has the smallest gap with the actual average wage at £18,857 against the £21,219 needed. In England the narrowest gap is in the North East with £20,149 against £23,616. 

These figures make for frightening reading and show that housing affordability is no longer just a problem for lower wage earners," said Jan Crosby, head of housing at KPMG. "Now unless you earn well above average or receive an inheritance, it is unlikely you will be able to afford to buy, no matter where in the UK you live.”

How to find record low mortgage rates

Mortgage rates have hit record lows, from just 1.09% for a two-year deal to 1.99% for a five-year deal.

Mortgage rates are continuing to tumble as lenders compete to stay in the best-buy spotlight, figures showed today.

The average cost of a two-year fixed rate mortgage for people with a 40 per cent deposit has fallen to a new record low of 1.91 per cent.

The typical cost of a five-year deal for someone borrowing 60 per cent of their property’s value has also fallen during the past few weeks, dropping to 2.64 per cent from 2.71 per cent at the beginning of April.

The figures come as lenders continue to fight to head up the best-buy tables, with two banks both recently launching new record-low fixed rate deals.

HSBC is offering a five-year fixed rate mortgage of 1.99 per cent, for people with a 60 per cent per cent deposit who paid a £1,499 fee, the lowest interest rate on record for this term.

Meanwhile, The Co-operative Bank jumped to the top of the charts with a two-year fixed rate loan of 1.09 per cent, on a 60 per cent loan to value ratio (LTV) with a £1,449 arrangement fee, also the cheapest deal ever seen for the term.

Many lenders are currently offering two-year fixes for less than 1.5 per cent, including Lloyds Bank at 1.14 per cent, Yorkshire Building Society at 1.18 per cent and the West Brom at 1.19 per cent.

But while these deals typically require a deposit of at least 35 per cent, eye-catching rates are not limited to those borrowing a lower proportion of their home.

The West Brom is offering a two-year fixed rate loan of 1.89 per cent for people with only a 20 per cent deposit, while Leek United Building Society has a deal of 2.69 per cent on 90 per cent LTV mortgages.

We are likely to see more headline grabbing deals as the year comes to a close, lenders will be looking to get customers on board to not only meet lending targets, but they also need to ensure they have decent deals on offer before the Bank of England rises interest rates.

Lenders borrowed cheaply from the Government using the Funding for Lending Scheme, so rates will remain low until this money they have sidelined has dried up. “SWAP rates are starting to creep up again, however the general feel for mortgage rates right now is that lenders are still fighting to get a headline rate to attract borrowers through the door.

The high level of competition is beginning to tempt potential buyers into the housing market, as well as encouraging existing homeowners to remortgage.

The British Bankers Association recently said the number of mortgages approved for house purchase had hit a six-month high in March, while pipeline loans for those remortgaging shot to an eight-month high.

These low rate deals show that it has never been a better time to get a mortgage.

However, as with any deal, borrowers must work out the true cost, especially if they are fixed for the short-term and carry a high upfront fee.

For More information on mortgage rate CLICK HERE

General Election 2015: The property market is freaking out at the prospect of a Labour government

The property market is terrified of Labour-led government, one of the UK's largest property search websites has suggested, thanks to the prospect of falling house prices and rising interest rates.

According to Zoopla, Labour's policies on the housing market, which include giving councils the power to double council tax on homes left empty for a year and giving first-time buyers priority access to new homes, will "make UK property a generally less attractive investment". 

Labour has also pledged to introduce a mansion tax on homes worth more than £2m, although it will also abolish stamp duty for first-time buyers.

But Zoopla said the best outcome for those in the property sector would be a continuation of the current coalition.

Property will appear less attractive to owners as a result of proposed new property taxes, less attractive to landlords and investors as a result of proposed new rent controls and less attractive to first-time buyers and lenders as a result of proposed changes to current government support schemes. The follow-on impact of falling house prices and lower consumer spending to the overall economy could be significant.

Zoopla's Lawrence Hall added that the mansion tax will be significant to those wishing to invest in the UK.
It is a great example of a good political soundbite but a poor policy. It started out as an idea to tax billionaire non-dom property owners and has turned into a proposed tax on working British families. 

UK homeowners already pay the highest property taxes in the developed world, so the introduction of any new tax would be value destructive to the entire UK property market. 

But using a sledgehammer to crack some of these walnuts by further taxing working Brits primary residences and imposing controls on all landlords and tenants is dangerous to the health of the overall housing market.

UPDATED: Competitive mortgage rates tempt buyers

Buyers are being tempted back into the housing market due to competitive mortgage rates.

Mortgage approvals for house purchase jumped to a six-month high in March as competition among lenders helped tempt buyers back to the market, figures showed today.

A total of 38,751 loans were in the pipeline for people buying a property during the month, the highest level since September last year, according to the British Bankers’ Association.

It was the third consecutive month during which approvals for house purchase have increased, after the market suffered its traditional seasonal dip in December. There was also a further rise in the number of loans arranged for people remortgaging, with these rising to an eight-month high of 19,120.

The BBA credited the uptick in activity to consumers taking advantage of the competitive mortgage rates that were currently available.

But despite the improvement in approvals levels, they were still significantly lower than they had been in March last year, shortly before tougher lending criteria were introduced under the Mortgage Market Review.

Approvals for all types of lending totalled 63,778 in March, 14 per cent below the level seen in the same month of 2014.

Mortgage advances also increased to a six-month high, reflecting the recent upturn in mortgage approvals.

Net lending, which strips out repayments and people switching loan, totalled £792 million during the month, although this was still significantly below last March’s figure of £1.23 billion.

Today’s data is the latest in a series that suggests the property market is beginning to heat up again as it benefits from a spring bounce.

A recent survey by mortgage lender Halifax showed that consumer confidence in the housing market had soared to an eight-month high during March on the back of the improving economy and low mortgage rates. 

The Council of Mortgage Lenders also said advances had jumped by a fifth during the month, while HM Revenue & Customs reported a rise in transactions in March.

Meanwhile, figures from property services group LMS showed that the number of loans that were advanced to people remortgaging increased by 4 per cent last month, although they were still 11 per cent lower than for the same month last year.

But despite the increase in number, the value of advances for people remortgaging fell to £3.3bn in March, the lowest level for two years.

The group also found that the average mortgage term had increased to five years, compared with 4.5 years 12 months ago.

Andy Knee, chief executive of LMS, said: “Despite a recent boost to mortgage lending as we head into summer, remortgage figures remain lower than last year, prolonged by the uncertainty of a looming election.

“At a time when interest rates and offers are at a record low, it is surprising to see that borrowers are remortgaging less often and are failing to capitalise on these offers.

“Stricter lending criteria and uncertainty around the election may be dissuading people from remortgaging more frequently.”